Open & closed end funds

An investment or ‘closed end’ trust is a public company whose business is to invest in other companies. It holds a portfolio of investments in the same way a unit or ‘open end’ trust does, and it is professionally managed by a fund manager. But instead of buying fund units from a private company, as you would with a unit trust, you invest by buying shares in the same way you would in a quoted company.

When valuing the shares of an investment trust, investors will look at the value of the investments held, subtract any liabilities, and divide that number by the number of shares in issue to get the ‘net asset value per share’ (NAV).

It is common for the share price of an investment trust to trade at a discount to that NAV. Units in unit trusts always trade at exactly their NAV because, rather than having a pre-set amount of capital and hence being at the mercy of the market, unit trusts can create new units and cancel existing ones as demand dictates.

• See Tim Bennett’s video tutorial: Investing in funds – why we prefer investment trusts.

Hedge fund manager Hugh Hendry: 'It felt like the sun rose only to humiliate me'

In a series of three short videos, Merryn Somerset-Webb talks to Hugh Hendry, manager of the Eclectica hedge fund, about everything from China to the US, Europe, and Japan.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


22 December 1973: Opec more than doubles the price of oil

On this day in 1973 Opec, the oil price cartel, more than doubled the price of oil from $5.12 a barrel to $11.65.